2022 (8) TMI 173 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - personal guarantee to financial creditor - existence of debt and dispute or not - HELD THAT - After perusal of the report submitted by Resolution Professional, there does not appear any request of the Resolution Professional for issuance of instruction for the purpose of conducting negotiations between the debtors and the creditors for arriving at the repayment plan. Therefore, based on the reasons recorded in the report submitted by the Resolution Professional, the application i.e. CP(IB) No. 185/Chd/Hry/2021 filed under the provisions of Section 94 of IBC, 2016 is hereby admitted under Section 100 of the IBC, 2016. The Insolvency Resolution Process is initiated against the Applicant/Debtor and the moratorium is declared, which begins with the date of admission of the application and shall cease to have effect at the end of the period of 180 days, as provided under Section 101 of IBC, 2016. The petition filed under Section 94(1) of the IBC, 2016 is allowed admitted.

Issues Involved:
1. Initiation of Insolvency Resolution Process (IR Process) against the Personal Guarantor under Section 94 of the Insolvency and Bankruptcy Code, 2016.
2. Compliance with procedural requirements for filing the application.
3. Appointment and actions of the Resolution Professional.
4. Submission and examination of the Resolution Professional's report.
5. Declaration of moratorium and its implications.
6. Publication of public notice and invitation of claims from creditors.
7. Preparation and submission of the repayment plan.
8. Conduct of creditors' meeting and submission of the report.

Detailed Analysis:

1. Initiation of Insolvency Resolution Process (IR Process) against the Personal Guarantor:
The petition was filed by the Personal Guarantor under Section 94 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of the IR Process against the Personal Guarantor who had extended a personal guarantee to secure a loan availed by the Corporate Debtor from the Central Bank of India.

2. Compliance with procedural requirements for filing the application:
The application was filed in the prescribed proforma, and a compliance affidavit was incorporated stating that the applicant was not an undischarged bankrupt, not undergoing any insolvency resolution process, and no application had been admitted against the applicant in the preceding 12 months.

3. Appointment and actions of the Resolution Professional:
Upon presentation of the application, the Adjudicating Authority appointed Mr. Bishwa Ranjan Chatterjee as the Resolution Professional. A limited notice of the petition was issued to the creditors, and the Resolution Professional was directed to file a report under Section 99 of the Insolvency and Bankruptcy Code, 2016.

4. Submission and examination of the Resolution Professional's report:
The Resolution Professional sought various documents and information from the Personal Guarantor, including a list of personal assets and liabilities, income tax returns, GST returns, and bank statements. The report recommended the admission of the application based on the compliance with the provisions of Section 94 of the Code and the defaults committed by the Corporate Debtor and the Personal Guarantor.

5. Declaration of moratorium and its implications:
The application was admitted under Section 100 of the IBC, 2016, initiating the IR Process against the Personal Guarantor. A moratorium was declared, effective for 180 days, during which any pending legal actions or proceedings in respect of any debt were stayed, creditors were barred from initiating any legal actions, and the debtor was prohibited from transferring or encumbering any assets.

6. Publication of public notice and invitation of claims from creditors:
The Resolution Professional was directed to publish a public notice within 7 days, inviting claims from creditors to be registered within 21 days. The notice was to be published in widely circulated newspapers in English and Vernacular languages.

7. Preparation and submission of the repayment plan:
The debtor, in consultation with the Resolution Professional, was to prepare a repayment plan, which included provisions for the payment of fees to the Resolution Professional. This plan, along with the Resolution Professional's report, was to be submitted to the Adjudicating Authority within 21 days from the last date of submission of claims.

8. Conduct of creditors' meeting and submission of the report:
If the Resolution Professional recommended a creditors' meeting, it was to be conducted in accordance with Sections 108 to 111. The Resolution Professional would prepare a report of the meeting and submit it to the Adjudicating Authority, ensuring compliance with the code of conduct under Section 208 of the IBC, 2016.

Conclusion:
The application filed under Section 94(1) of the IBC, 2016, was allowed and admitted, initiating the Insolvency Resolution Process against the Personal Guarantor. The process involved various procedural steps, including the appointment of a Resolution Professional, declaration of a moratorium, publication of a public notice, preparation of a repayment plan, and conduct of creditors' meetings, all in compliance with the provisions of the Insolvency and Bankruptcy Code, 2016.

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